Briefing on Procurement Policies and Procedures · 0 Briefing on Procurement Policies and...
21
Briefing on Procurement Policies and Procedures Administration Committee May 26, 2020 John O. Adler, CPPO Vice President, Procurement
Briefing on Procurement Policies and Procedures · 0 Briefing on Procurement Policies and Procedures Administration Committee. May 26, 2020. John O. Adler, CPPO. Vice President, Procurement
Thank Chair and Committee for opportunity to talk about the exciting world of public procurement. Thank Gary and David for leadership and motivation. Thank team for commitment to continuous improvement.
1
Agenda• Public procurement objectives• Regulatory environment• Organization• Sourcing methods• Contractor responsibility• Fair and reasonable price• COVID-19 Procurement
Presenter
Presentation Notes
Every couple years we like to take you through our procurement policies and processes This will be the first of a four part series on DART Procurement. Introduce attending members of the procurement team.
2
• Ensure public confidence• Ensure fair and equitable treatment• Foster effective full and open competition• Provide increased savings• Maximize purchasing power• Satisfy agency requirements• Courtesy, impartiality, and integrity• Strive for efficiency and effectiveness
- From the DART Procurement Regulations and ABA Model Procurement Code
Public Procurement Objectives
Presenter
Presentation Notes
These objectives come from the American Bar Association Model Procurement Code for State and Local Governments. This code was published by the ABA in 1979 and updated in 2000. About half the states have adopted a version of the model code. Our DART Procurement Regulation or DPR is based on the 1979 model code.
3
Presenter
Presentation Notes
Mission - Agile sourcing through strategic solutions developed by skilled professionals, employing sound procurement practices, who anticipate and satisfy customer needs. Vision - Engaged professionals providing effective and innovative solutions.
4
Texas Transportation Code Section 452.106- From DART’s enabling legislation and basis for DART Procurement Regulations (DPR)
FTA Circular 4220.1F (SAFETEA-LU)- Developed by FTA to assist grant recipients and subrecipients in complying with various Federal laws and regulations that affect FTA-assisted procurements
State and Federal Laws
Presenter
Presentation Notes
Circular implements law. Safe, accountable, flexible, efficient transportation equity act; a legacy for users. Published in November, 2003 and revised four times. FTA reports that 4220.1.G comes out this year.
5
• DART Procurement Regulations (DPR)– Procurement Regulations and Policy adopted by the
Board in a temporary status in 1986 (Resolution No. 860042) and final approval in 1990 (Resolution No. 900044)
• Board Resolutions– Board policy expressed in form of resolutions– Resolution No. 910140 contract award thresholds
DPR 2-104 – DPR shall apply to every expenditure ofpublic funds, except- (a) grants;- (b) contracts between the Authority and other public
agencies- (c) any transaction for, or related to, the borrowing of
money as described in Section 452.107(c) of the Texas Transportation Code.
Authority to Procure
Presenter
Presentation Notes
Applies to all purchases, including leases. Exemptions from the Procurement Department include: Investment services and debt financing Real Estate Legal services and outside counsel Media advertising City owned utilities Postal services
7
• DPR 2-102 – President/Executive Director responsible for procurement of property, services, and construction
• DPR 2-201 – President/Executive Director may delegate procurement authority with approval of the Board
• DPR 2-101 – No contract, modification, change order, or commitment shall be made on behalf of the Authority unless it is made in writing and executed by a representative of the Authority acting within the scope of his/her actual authority
Authority to Procure continued
Presenter
Presentation Notes
Express authority certified in a warrant signed by the President. Board approves all delegations.
8
• DART Administrative Policies Manual– Operating procedures issued by the CEO in conformance
with Board policy• Contract Administration Procedures
– Internal procurement procedures and guidelines issued by the Chief Procurement Officer in conformance with Board policy
• Forms Macro– Procurement document templates maintained in
conformance with Board policy
Standard Operating Procedures
Presenter
Presentation Notes
About a half dozen policies and 41 procedures
9
• Design and Construction contracts– Design services– Construction services
• Strategic Sourcing– Supply Chain Management– Business services– Capital acquisitions
• Administrative Support and Technology
Procurement Organization
Presenter
Presentation Notes
Cathy Hamilton AVP Adam Nicholas AVP Connie Arrington Manager for admin support
10
• Department-wide activity measurement• New contract procurement plan milestone
monitoring
KPI Dashboards
Presenter
Presentation Notes
Sophisticated yet simple on-line measurement system that includes dashboard performance measures and drill down information. We can drill down to the process to look for the common hangups.
• Invitation for Bids– Primarily for commodity procurements– Public advertising and DART.net– Award to the responsible bidder tendering the lowest
responsive bid• Request for Proposals
– Primarily for more complex procurements– Public advertising and DART.net– Negotiations are permitted– Award to the proposer tendering the most advantageous
proposal, based on technical factors and price
Sourcing Methods – Over $50,000
Fair and reasonable price
Presenter
Presentation Notes
Procurement by the numbers Three primary methods for obtaining full and open competition Small purchases require requesting 3 quotes, including 2 from M/WBEs Cooperating procurement most often involves using contracts awarded by the State of Texas
13
• Request for Qualifications– Professional services– Public advertising and DART.net– Selection based on technical factors only– Price negotiated with the most qualified firm– Task order contracts
• Construction Services– Task order contracts under $250,000– Design-bid Build– Design-Build– Construction Manager/General Contractor
Sourcing MethodsProfessional Services & Construction
Fair and reasonable price
14
• Small Purchases– Over $2500– Posted on DART.net– Invite minimum of three quotes (at least two from
M/WBE firms)– Award based on price, delivery and other factors– Analyze spend for aggregation opportunities
Procurement by the numbers Three primary methods for obtaining full and open competition Small purchases require requesting 3 quotes, including 2 from M/WBEs Cooperating procurement most often involves using contracts awarded by the State of Texas
Procurement by the numbers Three primary methods for obtaining full and open competition Small purchases require requesting 3 quotes, including 2 from M/WBEs Cooperating procurement most often involves using contracts awarded by the State of Texas
16
Responsible Offeror• Reference checks• Financial statements and D&B• System for Award Management (SAM) • Cost or Price Analysis• Site visit (as required)• Certifications• Evaluate proposal exceptions• Certificate of Interested Parties (Form 1295)• Rolling Stock – Buy America reviews• Insurance• Financial guarantee• EO final participation commitments
Presenter
Presentation Notes
The Authority only awards contracts to responsible suppliers. Procurement PSupport staff will assist with verifying References listed in the Event Exhibit L Business Questionnaire. Supplier performance from others are used as an indicator if the supplier is likely to be successful on the DART project. Financial Review – Review of information from banks with prior authorization by the supplier on Exhibit L. Other checks may include a Procurement analysis of the supplier’s Dun & Bradstreet report if banking information doesn’t suffice or is unobtainable. Depending upon the size, scope and Authority risk for a particular Procurement action, a Procurement financial analysis of a contractor’s financial statements may be required. Analysis would include financial ratio analysis and comparison of industry standards using a Risk Management Association publication; a review of contingent liabilities, credit available, and the auditor’s notes and disclosures. System for Award Management (SAM) Documentation will be checked prior to every award. https://www.sam.gov/SAM/pages/public/index.jsf . Supplier must not be debared. Cost or Price Analysis – see Fair & Reasonableness on a separate slide. Site Visit prior to receipt of bids or proposals so suppliers can view relevant equipment and facilities they will be offering on. Certifications to assure the integrity of the supplier. Exhibit A. Evaluate Proposal Exceptions – necessary to evaluate if offeror can meet the requirements of the Event. Certificates of Interested Parties (Form HB 1295) – Required for contracts over $1M or requiring DART Board approval. Rolling Stock – Buy America Reviews – FTA requirement for FTA funded procurements of buses and trains. Domestic must by greater than 70%, final assembly must be in USA. Specifications offered must meet the Event specifications. Insurance – Proper insurance documentation is required prior to contract award. Financial Guarantee - Bonding / Letter of Credit must be provided if required such as for construction (performance and payment bond). Economic Opportunity Final Participation Commitments - Affirmative action and minority participation.
Although every project is typically unique in its own way, there are several methods that can be used to determine fair and reasonableness. A combination of methods is often used in any given situation, as available. Market Research is typically conducted by the Project Manager during creation of the independent cost estimate (ICE), prior to receipt of proposals or bids. It may also be conducted by Procurement during the cost & price analysis of offers. For example, during clarifications with an offeror(s) or during negotiations, information may come to light that DART staff feels needs to be validated with information from an independent third party. Independent Cost Estimate - All Procurement actions require an Independent Cost Estimate (ICE) to be prepared before receiving bids or proposals. This document is prepared by DART (or by a hired consultant on behalf of DART) with an opinion of the should cost. Level of Competition – Adequate competition usually fosters the best market pricing. If there are two or more qualified offerors with prices in a competitive range, it’s often a good indicator. Historical Prices – DART has extensive history on prices for parts, construction and other services. Offerors prices can be cross checked against these prices for a sanity check, as applicable. Consumer/Producer Price Index – Often times, historical prices have aged. DART commonly escalates Historical Prices to current market prices using indices such as the U.S. Bureau of Labor Statistics Consumer Price Index (CPI), or the Producer Price Index (PPI). The government updates these indices monthly. Other Agency Pricing – DART may obtain other agency pricing for the same or similar scope of work for a project from agencies such as Trinity Metro (Fort Worth) or VIA Metropolitan Transit (San Antonio). The Texas Department of Transportation (TXDOT) also publishes some unit prices on-line for construction. DART can piggyback new events onto the Texas Department of Information Resources (DIR) site. Companies are already vetted and approved to provide certain products or services at stated prices. Ratios – DART often utilizes ratios from past similar contracts to gauge if the cost relationships of a new offer remain true. Those that don’t raise a potential red flag. This method often helps pinpoint where there is a misunderstanding of the requirement , or in a worst case scenario an offeror may have “padded” the offer. Clarifications are requested or discussed in negotiations with proposers. Often times better pricing can be negotiated. An example, if profit costs are very high, it could be the supplier foresees a lot of risk. DART and the supplier can discuss ways to mitigate the risk that would reduce costs. Overhead Rate Analysis – This is very important on Architectural & Engineering consultant events as overhead is typically the largest cost component. The analysts works with the suppliers to scrub out costs that are not allowable, allocable or reasonable. The costs must be in compliance with the DART Procurement Regulations or Federal Acquisition Regulations (FAR) Part 31. Overhead is also heavily scrutinized on manufacturing and construction contracts. Suppliers consider this data as proprietary. For other contracts, overhead rate analysis is often based upon ratios; and industry average. DFAR Weighted Guidelines Model (Profit) – In difficult negotiations on profit, DART may utilize the Defense Acquisition Regulations (DFAR) Weighted Guidelines Model to show the supplier what profit should be based upon an independent standard. Commodities with Volatile Prices – If too many risk dollars are placed in an offerors proposal, DART and the supplier will often negotiate and instead agree to an economic price adjustment provision to be triggered only if prices escalate (or de-escalate). Examples: Concrete and steel. Procurement typically drafts the clause language and the relevant index to be used. Schedule – The project schedule must be considered in some cases. A tight schedule may drive up the price. Web Pricing – Unit prices are often available for items that are readily available to the general public. Examples: Computers, printers.
18
• February 2020 – established supply chain sources to support the Agency with PPE, disinfecting equipment and other supplies.
• March 2020 – began receiving products. masks, gloves, hand sanitizer, sprayers and foggers purchased.
• Performed risk assessment with all Tier 1 contractors• Recalibrating requirements• Shorter contract terms for agility• Short term impact on Supply Chain is minimal• Long term impact to be determined
